Feb 27.Three hot spots tonight: Greece, the Ukraine and Turkey

 

 

 WEB PAGE ADDRESS:  WWW.HARVEYORGANBLOG.COM

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold: $1212.60 up $3.00   (comex closing time)
Silver: $16.51 down 7  cents  (comex closing time)

 

 

In the access market 5:15 pm

 

 

Gold $1213.10
silver $16.60

 

Tonight we have three hot spots to cover.

The first is the crisis in Greece where it seems that the Greeks have a payment of 1.6 billion euros that it must pay by the middle of March.  However the Euro boys do not want to pony over more money.  They also have 7.2 billion worth of liabilities that must be paid by next month on top of rolling over 4.6 billion in Treasury bills.  Greece may have to default.  There is rioting on the streets of Athens today.

 

The second hot spot is the Ukraine where they are experiencing hyperinflation to no end.  Food has disappeared from shelves.  The country has about 2.5 weeks of liquid reserves left before they run out. The IMF has now two huge headaches to deal with and everybody wonders where the money is going to come from.  The IMF only receives its money from donations from various countries as they have exhausted all other monies given to them.

Tonight, rioting on the streets of Kiev.

 

The third hot stop is Turkey.  We witnessed today, the complete collapse of the Turkish lira.  The government of Erdogan is feuding with its central bank.  This is something that investors frown upon and they are exiting this country faster than a speeding bullet.

 

We have many stories on these three fronts for you tonight as well as other important topics.

 

 

 

 

 

And now for gold/silver trading today.

 

Gold/silver trading:  see kitco charts on right side of the commentary.

 

 

Following is a brief outline on gold and silver comex figures for today:

 

 

The gold comex today had a poor delivery day, registering 0 notices served for nil oz.  Silver comex registered 1252 notices for 6,200,000 oz .

 

Three months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 259.32 tonnes for a loss of 44 tonnes over that period.

 

In silver, the open interest fell by 3,149 contracts as Thursday’s silver price was up by 16 cents. The total silver OI continues still remains relatively high with today’s reading at 160,378 contracts. The front month of March contracted by 7862 contracts as today is first day notice.

Interestingly, the entire silver complex did not collapsed yet as is their usual procedure when we enter  first day notice for an active contract month. We had 1252 notices served upon for 6,260,000 oz.

 

 

 

 

In gold we had a slight rise in OI even though gold was up by $8.60 yesterday. The total comex gold OI rests tonight at 396,927 for a gain of 51 contracts. Today, surprisingly we had 0 notices served upon for nil oz.

 

 

 

Today,  no change in gold inventory at the GLD/Inventory at 771.25 tonnes

 

 

In silver, /SLV  we had no changes in inventory to the SLV/Inventory 325.734 million oz

 

 

We have a few important stories to bring to your attention today…

Let’s head immediately to see the major data points for today

 

 

Let us now head over to the comex and assess trading over there today.

Here are today’s comex results:

 

 

The total gold comex open interest rose by 51 contracts today from  396,876 up to 396,927 as gold was up by $8.60 yesterday (at the comex close). The big February contract month is now off the board.  The next contract month of March saw it’s OI fall by 217 contracts down to 173. The next big active delivery month is April and here the OI fell by 3,404 contracts down to 257,857. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was awful at 51,847. The confirmed volume yesterday ( which includes the volume during regular business hours  + access market sales the previous day) was fair at 151,648 contracts even  with mucho help from the HFT boys. Today we had 0 notices filed for nil oz.

And now for the wild silver comex results.  Silver OI fell by 3,149 contracts from 163,527 down to 160,378 as silver was up by 16 cents with yesterday’s trading. We did not get our usual collapse in OI as we enter  first day notice.  The non active contract month of February is now off the board.  The next big active contract month is March and here the OI fell by a larger than expected 7862 contracts down to 3,142.  The estimated volume today was poor 14,431 contracts  (just comex sales during regular business hours. The confirmed volume yesterday was excellent (regular plus access market) at 63,149 contracts. We had 1252 notices filed for 6,240,000 oz today.

March initial standings

 

Feb 27.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz   482.25  5 kilobar (Manfra)
Deposits to the Dealer Inventory in oz 700.01 (Brinks)
Deposits to the Customer Inventory, in oz  80,375.000 oz   2500 kilobars (JPMorgan,Scotia)
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices)  173 contracts (17,300 oz)
Total monthly oz gold served (contracts) so far this month 0 contracts(nil oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month

Total accumulative withdrawal of gold from the Customer inventory this month

 482.25 oz

Today, we had 1 dealer transactions

we had 0 dealer withdrawals:

total dealer withdrawal: nil oz

 

 

we had 1 dealer deposits:

 

i) Into Brinks:  700.01 oz

 

we had 1 customer withdrawals

i) Out of Manfra:  5 kilobar or 482.25 oz

 

total customer withdrawal: 482.25 oz

 

 

we had 0 customer deposits:

 

 

total customer deposits;  nil  oz

 

We had 1 adjustment

 

i) Out of JPMorgan: 401.05 oz was adjusted out of the customer and this landed into the dealer account at JPM<

 

 

 

Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 95 notices were stopped (received) by JPMorgan customer account.

To calculate the total number of gold ounces standing for the March contract month, we take the total number of notices filed so far for the month (o) x 100 oz  or  0 oz , to which we add the difference between the open interest for the front month of March (173) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.

 

Thus the initial standings for gold for the March contract month:

 

No of notices served so far (0) x 100 oz  or ounces + {OI for the front month (173) – the number of  notices served upon today (0) x 100 oz} =  17,300 oz or .5381 tonnes

 

 

Total dealer inventory: 814,895.586 oz or 25.34 tonnes

Total gold inventory (dealer and customer) = 8.337 million oz. (259.32) tonnes)

 

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 44 tonnes have been net transferred out. However I believe that the gold that enters the gold comex is not real.  I cannot see continual additions of strictly kilobars.

 

 

end

 

 

 

And now for silver

 

March silver initial standings

feb 27 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory nil  oz
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory  nil  oz ( Scotia)
No of oz served (contracts) 1252 contracts  (6,260,000 oz)
No of oz to be served (notices) 1890 contracts (9,450,000)
Total monthly oz silver served (contracts) 1252 contracts (6,260,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month

Today, we had 0 deposit into the dealer account:

total dealer deposit: nil   oz

 

we had 0 dealer withdrawal:

total dealer withdrawal: nil oz

 

We had 0 customer deposits:

 

 

 

total customer deposit: nil oz

 

We had 0 customer withdrawals:

 

 

total customer withdrawal: nil  oz

 

we had 1 adjustment

 

i) Out of CNT: 1,296,519.03 oz was adjusted out of the customer and this landed into the dealer account of CNT

 

Total dealer inventory: 68.811 million oz

Total of all silver inventory (dealer and customer) 176.895 million oz

.

The total number of notices filed today is represented by 1252 contracts for 6,260,000 oz. To calculate the number of silver ounces that will stand for delivery in March, we take the total number of notices filed for the month so far at (1252) x 5,000 oz    = 6,260,000 oz to which we add the difference between the open interest for the front month of March (3142) and the number of notices served upon today (1252) x 5000 oz  equals the number of ounces standing.

 

Thus the initial standings for silver for the March contract month:

1256 (notices served so far) + { OI for front month of March (3142) -no of notices served upon today (12560} x 5000 oz =  15,710,000 oz standing for the March contract month.

 

 

for those wishing to see the rest of data today see:

http://www.harveyorgan.wordpress.com or http://www.harveyorganblog.com

 

end

 

 

The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.

There is now evidence that the GLD and SLV are paper settling on the comex.

***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:

i) demand from paper gold shareholders

ii) demand from the bankers who then redeem for gold to send this gold onto China

vs no sellers of GLD paper.

 

 

 

And now the Gold inventory at the GLD:

 

feb 27.2015 no change in gold inventory at the GLD/Inventory at 771.25 tonnes

 

 

Feb 26. no change in gold inventory at the GLD/Inventory at 771.25 tonnes

Feb 25. no change in gold inventory at the GLD/Inventory at 771.25 tonnes

 

Feb 24.2015: no change in gold inventory at the GLD/Inventory at 771.25 tonnes

 

Feb 23.2015: no change in gold inventory at the GLD/Inventory at 771.25 tonnes

 

 

Feb 20/we had another good addition of 1.79 tonnes of gold into the GLD.  Inventory 771.25 tonnes

 

Feb 19/ a huge addition of 1.5 tonnes of gold into the GLD/Inventory 769.46

 

Feb 18/ a small withdrawal of .3 tonnes/no doubt to pay for fees/Inventory 767.96 tonnes

 

Feb 17/no changes in gold inventory at the GLD/Inventory 768.26 tonnes

 

feb 13. we another another withdrawal f 3.25 tonnes of gold from the GLD/Inventory 768.26 tonnes

 

 

Feb 12: we had a withdrawal of 1.8 tonnes of gold from the GLD/Inventory 771.51 tonnes

 

Feb 11.no change in gold inventory at the GLD/Inventory 773.31 tonnes

 

 

 

 

 

 

Feb 27/2015 / no change in gold inventory at the GLD/

inventory: 771.25 tonnes.

The registered vaults at the GLD will eventually become a crime scene as real physical gold departs for eastern shores leaving behind paper obligations to the remaining shareholders. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks).

GLD : 771.25 tonnes.

 

 

end

 

 

And now for silver (SLV):

 

 

Feb 27.2015 no change in silver inventory tonight: 725.734 million oz

 

 

Feb 26. no change in silver inventory at the SLV/Inventory at 725.734 million oz

 

 

Feb 25. no changes in silver inventory/SLV inventory at 725.734 million oz

Feb 24.we had an addition of 1.435 million oz of silver to the SLV/SLV inventory at 725.734 million oz

 

Feb 23 no change in silver inventory/324.299 million oz

Feb 20 no change in silver inventory/324.299 million oz

 

Fen 19/ we had a huge addition of 4.082 million oz of silver into the SLV/Inventory 324.299 million oz

 

 

Feb 18.2015/ no change in silver inventory at the SLV/Inventory at 320.327 million oz

 

Feb 17 no changes in silver inventory at the SLV/Inventory at 320.327 million oz

 

Feb 13 no change in silver inventory at the SLV/inventory at 320.327 million oz.

 

Feb 12 no change in silver inventory at the SLV/inventory at 320.327 million oz

 

Feb 11 no change in silver inventory at the SLV/inventory at 320.327 million oz

 

 

feb 27/2015   no changes/

 

 

SLV inventory registers: 325.735 million oz

 

 

end

 

 

And now for our premiums to NAV for the funds I follow:

Note: Sprott silver fund now for the first time into the negative to NAV

Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)

 

 

1. Central Fund of Canada: traded at Negative  5.9% percent to NAV in usa funds and Negative 6.2% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.5%

Percentage of fund in silver:38.0%

cash .5%

 

( feb27/2015)

 

Sprott gold fund finally rising in NAV

 

 

 

2. Sprott silver fund (PSLV): Premium to NAV falls to + 2.73%!!!!! NAV (Feb 27/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to +.22% to NAV(feb 27 /2015)

Note: Sprott silver trust back  into positive territory at +2.73%.

Sprott physical gold trust is back into positive territory at +.22%

Central fund of Canada’s is still in jail.

 

 

end

 

At 3:30 pm we get the COT report which gives position levels of our major players:

 

First the gold COT

 

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
184,416 58,245 41,717 133,432 269,126 359,565 369,088
Change from Prior Reporting Period
-3,705 1,858 6,852 7,999 58 11,146 8,768
Traders
142 81 75 54 53 228 184
 
Small Speculators  
Long Short Open Interest  
39,742 30,219 399,307  
-1,369 1,009 9,777  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, February 24, 2015

 

Our large speculators:

Those large specs that have been long in gold pitched a large 3705 contracts from their long side

Those large specs that have been short in gold added another 1858 contracts to their short side.

 

Our commercials;

Those commercials that have been long in gold added a huge 7999 contracts to their long side.

Those commercials that have been short in gold added on a tiny 58 contracts to their short side.

 

Our small specs;
Those small specs that have been long in gold pitched 1369 contracts from their long side

Those small specs that have been short in gold added another 1009 contracts to their short side.

 

Conclusions:  generally very bullish if you believe the figures.

 

And now for our silver COT

 

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
57,348 20,009 23,044 67,267 109,414
-3,797 187 -1,031 -1,427 -7,001
Traders
71 44 43 44 45
Small Speculators Open Interest Total
Long Short 166,676 Long Short
19,017 14,209 147,659 152,467
-2,262 -672 -8,517 -6,255 -7,845
non reportable positions Positions as of: 137 117
Tuesday, February 24, 2015   © Silve

 

Our large specs:

 

Those large specs that have been long in silver pitched a large 3797 contracts from their long side

Those large specs that have been short i silver added another 187 contracts to their short side.

 

Our commercials;

Those commercials that have been long in silver pitched 1427 contracts from their long side.

Those commercials that have been short in silver covered a monstrous 7001 contracts from their short side.

 

Our small specs;

Those small specs that have been long in silver pitched a large 2262 contracts from their long side.

 

Those small specs that have been short in silver covered 672 contracts from their short side.

 

Conclusion:  again very bullish from a commercial standpoint and if you believe the figures.

 

end

 

 

And now for your most important physical stories on gold and silver today:

 

 

 

Early gold trading from Europe early Friday  morning:

 

 

(courtesy Mark O’Byrne)

 

 

Gold Sovereigns Bought by Greeks in Volume as New Greek Drachmas Designed

– Greece warns may default on IMF loan next week

– Greek bank runs continue and deposits flee

– German Bundestag votes for bailout extension

– Syriza agree to a bailout extension of four months, in return for concessions yet to be approved by the EU

– Questions over Syriza negotiating a weak deal despite its strong position

– Greece and EU buying time to arrange orderly “Grexit”?

– Greece has printing presses poised to print newly designed Greek drachmas

– Greeks buying gold bullion

The Euro Working Group discussed Greece’s imminent funding problems yesterday amid mounting concern about how the country will meet its massive obligations.

Minister of State for Coordinating Government Operations, Alekos Flambouraris, suggested yesterday that Greece might delay payment to the IMF if it cannot find the necessary money. Greece is due to pay the IMF 1.6 billion euros next month but the Greek Minister said that Athens might ask to delay this payment for two months.

Proposed New Greek Drachmas

Kathimerini reports that “the possibility of Greece postponing the repayment of any debt tranches to the IMF is seen as “exceptionally complicated” with “many obstacles,” according to officials “familiar with the subject”. They stress that such a move would constitute a “clear default,” with consequences for a large number of other loans Greece has received.”

Yesterday the Bank of Greece presented its latest, January, bank deposit data and it shows bank runs continue in Greece. There was a record €12.2 billion monthly outflow of deposits. This is greater in absolute and relative terms than anything experienced during any of the previous Greek crises and bailouts.

The total amount of Greek corporate and household deposits has now tumbled to just €148 billion. This number is in line with some of the more pessimistic expectations, and brings the total cash holdings at Greek banks to the lowest level since August 2005.

Separately and not surprisingly, the German parliament has approved the bailout extension by a large majority in the Bundestag.

The announcement last Friday that Greece would after all adhere to an extended bailout program was viewed as a capitulation by Syriza and a triumph for Germany and the Eurogroup.

The statement, which simply reaffirmed the existing program, substituting some unpalatable terms with euphemisms – Troika is referred to as “institutions,” for example, has sparked dissent within Syriza itself and the first violent protests against the new government outside the Greek parliament were seen yesterday.

We consider it odd that Greece should have folded while its hand was so strong. Greece could push the EU to the brink. From the point of view of Syriza’s electorate, things cannot get much worse anyway.

Ultimately, Greece could get its bridging loan from Russia or the BRICS bank so why should Syriza buckle and face national humiliation when it did not need to. We suspect a larger game is afoot.

Sharelynx.com

Some analysts have suggested that the EU and Greece have reached a stalemate and are preparing to attempt an orderly exit by Greece from the Euro and back to the Drachma.

 This may certainly be the case. Greece has newly designed Drachma notes (see above) and printing presses waiting for the order to start rolling.

 Where all this is leading is anyone’s guess. If it is a simple case of Syriza being out-smarted by its EU partners it can only lead to social unrest in Greece and a possible rise of the fascist Golden Dawn.

At any rate, Greece is bankrupt with no hope in sight, at least within the Euro monetary union, so eventual default appears inevitable.

If Greece and the EU have agreed to disagree there is no guarantee that the process will be orderly despite the best intentions of both sides. If it is achieved it will open the door for other peripheral nations to follow suit, each exit process a mine-field.

Greeks have been accumulating physical gold in recent months in anticipation of bank holidays, possible bail-ins and indeed a possible return to the drachma.

Despite the last minute Greek debt deal, we are continuing to see demand from Greece including demand from companies and some high net worth buying. 

Demand in January and so far in February has been very high with dozens of new accounts opened and purchases valued in the millions. Many of the new Greek clients said that these were not one of purchases, as is often the case, rather initial purchases, with a view to buying more in the coming months.

goldcore_bloomberg_chart6_27-02-15

We have clients in over 40 countries but Greece saw the greatest increase in demand in January and this has continued into the end of February. In demand are gold sovereigns and bars – some for delivery but more for storage, in Zurich primarily.

British sovereigns remain the traditional favourite of Greek investors and the Bank of Greece continues to see very high demand for sovereigns in Athens.

Millions of euros worth of demand for gold is small vis a vis other assets but it is a large increase in terms of physical gold demand – especially as it came from a very low base – Greek demand was quite low last year.

Concerns about bank deposits and the ‘Grexit’ remain and lingering doubts about the long term outlook are leading to continued safe haven demand.

The Greek situation is far from resolved and the euro is still in peril. Today came news that the Irish government has contingency plans for the collapse of the euro including a return to the Irish national currency – the Irish punt. This is something we said was likely to be the case and we were attacked as “scaremongering.”

The truth can be a scary thing sometimes … especially for those who put their head in the sand and ignore it.

Owners of physical gold will be protected should we see a reversion to national currencies and or further currency devaluations in the ongoing currency wars.

Updates and Award Winning Research Here


MARKET UPDATE

Today’s AM fix was USD 1,205.00, EUR 1,073.59 and GBP 782.77 per ounce.
Yesterday’s AM fix was USD 1,220.00, EUR 1,073.66 and GBP 785.58 per ounce.

Gold climbed 0.32% percent or $3.80 and closed at $1,208.40 an ounce on yesterday, while silver remained unchanged at $16.54 an ounce.

goldcore_bloomberg_chart7_27-02-15

Gold and silver are set for gains in all currencies this week after losses in February – losses which reversed some of the initial 2015 gains in January.

Gold in euros has retreated in February, after posting its biggest monthly rise in 17 years in January. Gold in euro is down 5.5% on the month – the biggest monthly drop in over a year.

Gold in euros appears to have found pretty strong support at the 50-day moving average (at €1061 currently) according to analysts in the Thomson Reuters Global Gold Forum.

Gold in US Dollars - 5 Days (Goldcore)

Gold in dollars edged downward in early morning trading in London, hampered by a stronger dollar and traders taking profits on gains seen this week. Gold in Singapore was up 0.2 percent at $1,210.80 an ounce near end of day trading. In late morning trading in London the metals group are all marginally lower.

Gold is $1,206.10 off 0.33%, silver is $16.47 off 0.77% andplatinum is $1,172.96 off 0.36%.

Chinese demand remained robust this week and again overnight which is supporting gold at these levels. As is the more dovish noises made by Fed Chair Janet Yellen on Wednesday.

China plans to start their own benchmark yuan denominated gold fix that would come from a new 1kg contract to be launched at the government run Shanghai Gold Exchange (SGE) a source told Reuters. The SGE only opened in the city’s free trade zone in September 2014 and allows foreigners to trade yuan denominated contracts.

The world’s biggest gold buyer will further influence the pricing of the precious metal and appears to have designs on becoming the world’s leading precious metals hub.

Gold in GBP - 5 Days (Goldcore)

India’s demand for gold was only average this week as buyers in the world’s number 2 buyer of the metal held off purchases ahead of an expected cut in import duty. But dealers are expected to increase their demand, if the import duty is lowered from a record 10 percent in Saturday’s federal budget.

India may announce a cut to their import duties in their annual budget to be published tomorrow. Some analysts put the cut on the gold duty at 2 to 4 percent from 10 percent. Another positive gold factor.

Gold in EURO - 5 Years (Goldcore)

U.S. economic data to be released today are the important GDP figures, The Chicago PMI, pending home sales and the University of Michigan’s consumer sentiment and inflation reports.

Poor numbers and a higher than expected inflation number should see gold make gains. Better than expected numbers could see gold come under selling pressure.

Earlier this week Switzerland’s competition commission said it was looking into possible gold and silver manipulation, and the Wall Street Journal reported the U.S. Department of Justice and the Commodity Futures Trading Commission (CFTC) were investigating at least 10 major banks for price rigging of precious metals markets.

The last thing insolvent banks and governments want are surging gold and silver prices.

Perverted and ‘unfree’ markets create profound risks to financial systems and economies for all investors and savers. They also present opportunities.

As ever, it is prudent to be on the opposite side of official manipulation as ultimately the free market forces of supply and demand will always win out.

This was seen recently when the Swiss franc peg broke resulting in the franc surging 40% in 13 minutes. The same will likely happen to precious metal prices when the manipulation of banks come to an end – likely through the power of the physical demand of 3 billion people including high net worth and central banks in Russia, India, China and Asia.

Breaking News and Updates Here

 

 

 

end

 

 

Brien Lundin is correct where he does not expect much from the Justice probe of the gold market:

 

(courtesy Brien Lundin/GATA)

 

 

Brien Lundin: Don’t expect much from Justice probe of gold market rigging

Section:

By Brien Lundin
Gold Newsletter, Metairie, Louisiana
Thursday, February 26, 2015

https://jeffersoncompanies.com/gold-newsletter/about-gold-newsletter

The good news is that manipulation of the gold market has finally come under investigation by the authorities, with the U.S. Justice Department opening up an investigation into 10 major banks.

The bad news is that the investigation is centering around potential rigging of the daily price fixings for gold, silver, platinum, and palladium. I know that a number of my colleagues in the hard-money industry may disagree, but I don’t think this amounts to a hill of beans in the big picture.

According to The Wall Street Journal, the Justice probe is centering around the actions of Bank of Nova Scotia, Barclays PLC, Credit Suisse Group, Deutsche Bank, Goldman Sachs Group, J.P. Morgan Chase, Societe Generale, Standard Bank Group, and UBS in the once- or twice-daily setting of the price benchmarks through conference calls
involving representatives of a few banks on the various fix-setting committees.

Precisely because of allegations of collusion or manipulation of the process to benefit trade positions — often in conflict with a client’s best interests — the long-held processes for setting the daily fixes for precious metals have been completely reformed.

Many believe this to be a very big deal, since everyone in the supply chain from mines to bullion dealers use the fix, and it’s the basis for many financial products and investment analysis.

But this issue never concerned me, for a couple of reasons.

First, the magnitude of the manipulation could have never been large — just a few pennies in either direction — or the manipulators would have exposed their actions. Plus, they couldn’t move the market much in any case, and the natural forces affecting the price would restore the proper order quickly after any rigged price fix.

Second, of course the process was manipulated. Can you imagine setting up an exclusive club of a few traders, allowing them to trade millions based on a price fix, and then putting them onto a conference line to help set that fix … and have them not move the price to their benefit?

And yet we are supposed to be shocked, shocked! that the price fix isn’t completely objective?

No, my greater concern is the level of longer-term price manipulation, being accomplished by either the central banks or deep-pocketed institutions, acting either in concert or simply with the same motivations.

So while you’ll see a lot of outrage in the blogosphere over this investigation, unless it turns up documentation of a broader strategy of manipulation, there’ll be nothing to see here. Move on.

 

 

end

 

This is what Bill Holter has been predicting will happen:

 

Two big commentaries:

 

First:

 

 

China is about to overthrow London in gold trading, Maguire tells KWN

Section:

4:10p ET Friday, February 27, 2015

Dear Friend of GATA and Gold:

The King World News Internet site seems to have returned to operation with an interview with London metals trader Andrew Maguire.

Having inserted its government-owned banks into the new London gold price fixing system, China will overthrow the London bullion banks with a new gold exchange that cuts the banks out of any privileged position in the market, Maguire says. He predicts that as the London market loses pricing power, the bullion banks operating there no longer will be able to deliver real metal and will be forced to settle contracts in cash. An excerpt from Maguire’s interview is posted at the KWN blog here:

http://kingworldnews.com/andrew-maguire-lbma-paper-ponzi-crushed-gold-si…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

 

end

 

 

 

Here is the Reuters story that Maguire is referring to;

 

 

(courtesy Reuters/GATA)

 

China plans yuan-denominated gold fix this year, sources tell Reuters

Section:

By A. Ananthalakshmi
Reuters
Friday, February 27, 2015

SINGAPORE — China plans to launch a yuan-denominated gold fix this year to be set through trading on an exchange, sources familiar with the matter said, as the world’s second-biggest bullion consumer seeks to gain more say over the pricing of the precious metal.

The Chinese benchmark would be derived from a new 1-kilogram contract to be launched on the state-run Shanghai Gold Exchange, a senior source directly involved in the process told Reuters.

China, also the top producer of gold, feels that its market weight should entitle it to be a price-setter for bullion and it is asserting itself at a time when the established benchmark, the century-old London fix, is under scrutiny because of alleged price-manipulation. …

… For the remainder of the report:

http://www.reuters.com/article/2015/02/27/gold-china-fix-idUSL4N0W04Z220…

 

 

end

 

Maguire talks with Turd Ferguson on the above topic:

 

(courtesy Turd Ferguson/Andrew Maguire)

 

Maguire discusses wild leverage in metals, says London fixes soon will be obsolete

Section:

2p ET Friday, February 27, 2015

Dear Friend of GATA and Gold:

The TF Metals Report’s Turd Ferguson today interviews London metals trader Andrew Maguire about the wild leverage used by bullion banks in suppressing gold and silver prices. Also discussed is a new 23-hour worldwide gold exchange that Maguire expects will make the twice-daily London gold price fixes obsolete. Maguire’s interview is 46 minutes long and can be heard at the TF Metals Report here:

http://www.tfmetalsreport.com/podcast/6650/big-changes-coming-global-gol…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

end

 

Alasdair Macleod…

 

extremely important commentary from Alasdair tonight on the true value of the Euro: is it riskier than we think!!

 

(courtesy Alasdair Macleod)

 

 

 

 

 

The euro may be riskier than you think

Finance ministers in the Eurozone appear to have had a free lesson in game theory from Professor Yanis Varoufakis, the Greek finance minister.

At the time of writing Greece’s future in the Eurozone is far from secured, but it appears that Greece has achieved something.

He gave his fellow finance ministers a deal they dared not refuse, though it still has to be ratified by some parliaments, including Germany’s today. Varoufakis almost certainly understands that the Eurozone is in a weaker position than the bureaucrats and finance ministers themselves believed. It was important for them to become aware of this reality, which was central to his approach. It appears that under the Lisbon Treaty, Eurozone states cannot expel Greece: she can only leave with everyone’s unanimous agreement, including her own. And they probably didn’t realise that playing hardball against Greece would force the ECB to write off debts approaching ten times her equity capital of only €10.8bn. This would require all member states to increase their capital subscriptions, including the other Eurozone states subject to austerity packages.

Equally, Varoufakis would have known that he could not push his opposite numbers too far because the Brussels establishment also have their national parliaments to consider and the positions of Italy, Spain, Portugal and even Ireland. A revolt against previously-agreed austerity packages by any of these other states would have untold ramifications not only for the future of the Eurozone, but the euro itself.

In the wake of this episode the status of the euro as money is likely to be increasingly questioned, not just in the foreign exchanges, but by its users as well. This should be put into context by referring to Ludwig Von Mises’s regression theorem. Put simply, the theorem states that the validity of any currency as money is based on its history and the basis of the value it had before it was accepted as money. This unfashionable view is demonstrably true of gold and silver, but is it true of paper currencies?

The US dollar and pound sterling have both survived more than one hundred years, having based their original value on extended periods of gold convertibility, and in the case of sterling long before that on silver. This in the minds of the users gives them a pedigree few would question. However, they are very much the exceptions in today’s fiat currencies which are the motley survivors of some 57 hyperinflations, and there are plenty of examples of how a lack of regression coincides with a temporary character. Look no further than the Ukraine, which is suffering its second hyperinflation in 25 years. After Britain gave her African colonies independence in the 1960s, the value of all their currencies fell sharply in black-market dealings (the sole exception being Botswana which didn’t introduce the pula until long after independence).

Logic, if not familiarity, suggests that there is something in the regression theorem, which brings us back to the euro. Like the Kenyan shilling, the Zambian kwacha or the Ukrainian hryvnia, the euro lacked any pedigree on its creation. There was no period when people had a choice of national currencies to aid the transition. While bonds and financial instruments were denominated in euros from January 1999 onwards, notes and coins replaced national notes and coins three years later overnight.

So, if Von Mises’s regression theorem has any validity, holders of euros should be considering their options. It is also unfortunate timing that the ECB is about to embark on its most aggressive bout of monetary expansion to date, which could end up sealing the euro’s fate. If so, the euro will turn out to be the Achilles heel of the global monetary system.

And now for the important paper stories for today:

 

 

Early Thursday morning trading from Europe/Asia

 

 

1. Stocks mixed on major Asian bourses  / the  yen falls  to 119.32

1b Chinese yuan vs USA dollar/ yuan weakens  to 6.2695
2 Nikkei up 12.15 or 0.06%

3. Europe stocks mostly down  // USA dollar index down to 95.06/

3b Japan 10 year yield huge fall to .33%/ (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.32/everybody watching the huge support levels of 117.20 and that level acting as a catapult for the markets.

3c Nikkei now  above 17,000/

3e The USA/Yen rate still  below the 120 barrier this morning/
3fOil: WTI 48.95 Brent: 61.02 /all eyes are focusing on oil prices. This should cause major defaults as derivatives blow up.

3g/ Gold par /yen up;

3h/ Japan is to buy the equivalent of 108 billion usa dollars worth of bonds per MONTH or $1.3 trillion

Japan’s GDP equals 5 trillion usa/thus bond purchases of 26% of GDP

3i Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt (see Von Greyerz)

3j Oil up this morning for  WTI  and Brent

3k  German lawmakers approved the Greek line extension.

 

3l  Greek 10 year bond yield :9.20% (up 25 basis points in yield)

3m Gold at $1208.00. dollars/ Silver: $16.51

3n USA vs Russian rouble:  ( Russian rouble  down 1 1/4 per rouble / dollar in value)  61.44!!!!!!.  Ukraine’s UAH:33.8  official rate  par in UAH from Thursday night/but black market 44.00 to the dollar.

3 0  oil  into the 48 dollar handle for WTI and 61 handle for Brent

3p  Fed speak (Bullard) more on the hawkish side of things i.e. remove the “patience”  in raising rates.

3Q  SNB (Swiss National Bank) still intervening again driving down the SF/window dressing/Swiss rumours of intervention to keep the  soft peg at 1.05 Swiss Francs/euro and major support for the Euro.

3r  USA justice department investigating 10 major USA banks in the manipulation of gold and silver pricing

3s Negative German 5 year bond yield for first time.

3t  Greek economic minister and energy minister plan to block privatization/(good for them)

4. USA 10 yr treasury bond at 2.04% early this morning. Thirty year rate well below 3%  (2.63%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid

 

 

Market Wrap: Futures Fractionally Red Ahead Of Pre-Weekend “Nasdaq 5000” Push

 

If there isone thing that is virtually certain about today’s trading (aside from the post Rig Count surge in oil because if there is one thing algos are, it is predictable) is that despite S&P futures being a touch red right now, everything will be forgotten in a few minutes and yet another uSDJPY momentum ignition ramp will proceed, which will push the S&P forward multiple to 18.0x on two things i) it’s Friday, and an implicit rule of thumb of central planning is the market can’t close in confidenece-sapping red territory ahead of spending heavy weekends and ii) the Nasdaq will finally recapture 5000 following a final push from Apple’s bondholders whose recent use of stock buyback proceeds will be converted into recorder highs for the stock, and thus the Nasdaq’s crossing into 5,000 territory because in the New Normal, the more expensive something is, the more people, or rather algos, want to buy it.

European equities trade relatively mixed heading into the North American crossover with European newsflow on the light side thus far. On a sector specific basis, material names lead the way lower in tandem with the paring of recent gains in precious metals complex, while notable movers in Europe come in the form of Airbus (+6.6%) and IAG (+4.3%) following their respective earnings. However, as has been the case over the past few days, a bulk of the price action for Europe has been provided by fixed income markets, with German paper initially seeing a leg lower alongside the Saxony CPI release which showed a substantial bounce-back from the previous for both the M/M and Y/Y (M/M 0.9% vs. Prev. -1.2%, Y/Y 0.3% vs. Prev. -0.3%).This move was then extended throughout the morning, paring some of the hefty gains seen over the past few days, with some analysts also noting an unwind of month-end extensions. From a UK perspective, the short-sterling strip is being weighed on by the latest comments from BoE’s Shafik who said if slack is absorbed quickly, lift-off could be at a faster rate than the market currently expects.

The Nikkei 225 (+0.1%) failed to hold on to earlier gains after crawling to a fresh 15yr high, as JPY clawed back some of its recent losses. Shanghai Comp (+0.4%) and Hang Seng (-0.3%) were supported by further speculation of continued support measures by the Chinese government. JGBs trade up 4 ticks with short-end paper notably outperforming, as results of today’ BoJ’s JPY 1.2trl purchasing operation indicated strong demand in the 1-3yr sector.

In FX markets, overnight AUD was the session’s biggest mover, falling against all of its counterparts as RBA rate talk gathered pace ahead of next week’s policy meeting. Analysts at Deutsche Bank, JP Morgan and Westpac all brought forward their forecasts for a 25bps rate cut next week, with markets now pricing in a 54% chance of such action. Heading into the European open, a video of RBA watcher McCrann got passed around desks with the commentator suggesting he expects the RBA to stand pat on rates for the moment, however, AUD has been relatively unshaken by these comments. Elsewhere GBP weakness has been observed across the board amid no new fundamental news, seemingly led by EUR/GBP which typically moves higher on the last trading day of the month due to month end demand. Emerging market currencies including TRY, ZAR and MXN are seen markedly lower this morning despite the USD trading lower as the prospect of Fed rate lift-off continues to weigh on the outlook for EM economies; TRY trades at a record low.

In the commodity complex, WTI crude futures rebounded overnight after finishing yesterday’s session down 5.53%, which saw the WTI-Brent crude spread at its widest level since January 2014, with energy specific news relatively light. Contrary to the move in energy prices, precious metals markets have drifted lower throughout the session, paring back some of the recent gains which saw gold prices rise their most in 3 weeks. In a similar manner, copper saw a pull-back from yesterday’s 6-week highs where prices rose to within proximity of the USD 6,000 per ton level.

In Summary: European shares fall with the basic resources and chemicals sectors underperforming and utilities, industrial outperforming. The Stoxx 600 is currently near its session low. The Swiss and Spanish markets are the worst-performing larger bourses, the U.K. the best. The euro is stronger against the dollar. German 10yr bond yields rise; Portuguese yields decline. Commodities gain, with nickel, silver underperforming and WTI crude outperforming. U.S. Chicago purchasing  manager  Michigan confidence, revised Q4 GDP, personal consumption, core PCE, ISM Milwaukee, pending home sales, due later.

Market Wrap

  • S&P 500 futures down 0.1% to 2108
  • Stoxx 600 down 0.2% to 389.9
  • US 10Yr yield up 1bps to 2.04%
  • German 10Yr yield up 4bps to 0.34%
  • MSCI Asia Pacific down 0.1% to 146.2
  • Gold spot down 0.4% to $1205.1/oz
  • Eurostoxx 50 -0.2%, FTSE 100 -0.1%, CAC 40 -0.1%, DAX -0.1%, IBEX -0.4%, FTSEMIB -0.1%, SMI -0.4%
  • Asian stocks little changed with the Sensex outperforming and the Kospi underperforming.
  • MSCI Asia Pacific down 0.1% to 146.2
  • Nikkei 225 up 0.1%, Hang Seng down 0.3%, Kospi down 0.4%, Shanghai Composite up 0.4%, ASX up 0.3%, Sensex up 1.6%
  • Euro up 0.24% to $1.1225
  • Dollar Index down 0.21% to 95.09
  • Italian 10Yr yield down 2bps to 1.33%
  • Spanish 10Yr yield down 2bps to 1.26%
  • French 10Yr yield up 2bps to 0.6%
  • S&P GSCI Index up 1% to 416
  • Brent Futures up 2.2% to $61.4/bbl, WTI Futures up 2.2% to $49.2/bbl
  • LME 3m Copper down 0.9% to $5834.5/MT
  • LME 3m Nickel down 1.5% to $14160/MT
  • Wheat futures up 0.8% to 504.5 USd/bu

Bulletin Headline Summary from RanSquawk and Bloomberg

  • German regional CPIs show a rebound from January, subsequently pressuring German paper, with Bunds also pulling back from this week’s substantial gains
  • Elsewhere, European equities trade in a particularly tight range with newsflow relatively light
  • Today sees the release of US GDP, Chicago PMI, Pending Home Sales and University of Michigan, as well as a host of Fed speakers
  • Treasuries decline overnight with EGBs; yields still lower on week after rally sparked by Yellen testimony on Tuesday, month-end duration extensions. Next week may see sales to hedge expected $22b offering from Actavis.
  • Consumer prices from Germany to Italy and Spain signaled an easing of deflation risks in the euro area; inflation in Italy was +0.1% in Feb. vs -0.3% median forecast while data from four German states before national data later today also showed improvement
  • As more central banks move to impose negative interest rates, economists are beginning to question just how low they actually could go; Barclays analysts suggest it may be “considerably lower” than the -75bps in Switzerland and Denmark
  • Hong Kong introduced more measures aimed at cooling the property market and protecting financial stability after home prices rose to a record last year
  • China plans to collect capital gains taxes from foreign money managers that invested in mainland markets during the five years through November 2014, a move that may compel funds to claw back more than $1b from investors to pay the government
  • Three months after Saudi Arabia made clear it was going to let oil prices keep tumbling, the strategy is showing signs of working as U.S. drillers idle rigs at a record pace, gutting investment plans and laying off thousands of workers
  • German lawmakers approved an extension of Greece’s loan  program after Merkel’s coalition staved off dissent from bailout-weary members in its own ranks
  • The U.S. government is considering whether to shut one or more Russian banks out of the world financial system if rebels backed by Russia continue to violate the cease-fire in Ukraine, two administration officials said
  • Assailants in Bangladesh’s capital hacked to death well- known U.S. blogger Avijit Roy and critically wounded his wife in a machete attack that police said may have been carried out by an extremist group
  • Sovereign 10Y yields higher. Asian stocks mostly higher, European stocks mixed; U.S. equity-index futures decline. Crude higher; gold and copper decline

 

 

DB’s Jim Reid summarizes the remainder of the overnight events

 

 

Yesterday we saw another big rally in peripheral yields with the highlight perhaps being that Portugal 10 year yields closed below the US 10 year for the first time since October 2007. In today’s EMR we show the long-term history back over 200 years between these two and you can see that this is a rare event. Lots of unusual events are continuing to occur with the extreme central bank activity and will do for some time yet.

Indeed the strong day for peripherals seemed to reflect the market focusing on what is now the imminent arrival of the ECB’s QE programme. 10y yields in Italy (-11.8bps), Spain (-10.5bps) and Portugal (-13.5bps) all fell significantly. It was a similar story in core markets too however as 10y Bunds also closed 2.8bps lower at 0.295%. Yesterday also marked the day that 7y Bunds stepped into negative territory with the curve now trading below zero up until that maturity. It was a stronger day for risk assets generally in Europe as the Stoxx 600 finished +1.02% and Crossover rallied 9bps. Despite all the Greece headlines of late, it’s clear that expected ECB stimulus has driven market returns through 2015 so far. In fact, Crossover is now 50bps tighter following the announcement by the Central Bank, 10y yields in Spain, Portugal and Italy are 25bps, 90bps and 35bps lower respectively and the Stoxx 600 is +9%

In the US, yesterday’s data and comments out of various Fed speakers took Treasury yields higher and helped fuel a Dollar rally. Indeed, 10y yields closed 6.1bps higher – including a 10bps swing off the day’s lows – and back above 2% again at 2.03%. In fact 10y yields are not far off the pre-Yellen speech at 2.06% on Tuesday now. 2y yields also closed higher (+4.4bps) at 0.641%. The Dollar, as measured by the DXY closed +1.15% higher at the close. In fact Dollar strength has been a theme all year and the DXY is +12.8% firmer through 2015 already, which is the highest since 1997. In terms of the data, the headline CPI print was a touch weaker than expected in the month of January at -0.7% mom (vs. -0.6% expected). The annualized headline print coming in at -0.1% yoy. The core meanwhile firmed and no doubt helped support some of the widening in Treasuries, printing at +0.2% mom which was up a tenth on the December print and also versus expectations. Again the annualized reading also stayed unchanged at +1.6% yoy. Elsewhere, data was more encouraging than that seen of late. Durable goods orders (+2.8% vs. +1.6% expected) and capital goods orders (+0.6% vs. +0.4% expected) were supportive. The FHFA house price index (+0.8% mom vs. +0.5% expected) also surprised to the upside whilst jobless claims came in a touch softer than expected at 313k (vs. 282k previously) although we note that the period also covered a public holiday.

There was no shortage of Fedspeak yesterday with the comments favouring those on the more hawkish side. Starting with Bullard, the St Louis Fed Chief was quoted as saying on CNBC that ‘we should take out ‘patient’ in March to provide optionality for the committee going forward’. San Francisco Fed President Williams meanwhile was quoted as saying in the WSJ that ‘in June it would be time to contemplate raising rates’. Finally the Cleveland Fed’s Mester reiterated the 2% inflation goal for the end of the year and was also noted saying that taking out the ‘patience’ language means June becomes a viable option for a rate hike.

Wrapping up the US, it was a less spectacular day for equity markets with the S&P 500 closing 0.15% lower at the close although in reality it was more of an energy related decline than anything else as energy stocks closed 1.76% lower led by falls for both WTI (-5.53%) and Brent (-2.56%) to $48.17/bbl and $60.05/bbl respectively.

In terms of the macro data in Europe yesterday, employment data in Germany was as expected with the unemployment rate unchanged at 6.5%. Consumer confidence for Germany improved however, up 0.4pts in March to 9.7. Elsewhere, money supply data for the Euro-area was above consensus (+4.1% yoy vs. +3.7% expected) and various confidence indicators for the region largely printed in line. Meanwhile in the UK, Q4 GDP of 2.7% was as expected.

Taking a quick look at the trading in Asia this morning, focus is on Japan with the latest inflation data for January. In terms of the numbers, the headline stayed at +2.4% yoy, which included a seasonally adjusted -0.1% mom reading for January. The core (excluding food) ticked down to +2.2% from +2.5% previously and the core-core (excluding food and energy) was unchanged at +2.1% yoy. Our colleagues in Japan noted that they see a low likelihood of any additional easing this year given that the BoJ has been emphasizing both the positive feedback from the decline in oil prices to real economic activity and also the stable inflation expectations of households. Elsewhere the preliminary industrial production reading for the region declined to -2.6% yoy from +0.1% previously, but still came in ahead of expectations (-3.1% yoy). In terms of early morning trading, the Nikkei (-0.19%) is modestly weaker on the back of the prints whilst the Shanghai Comp (+0.58%) and Hang Seng (+0.56%) are both higher.

In terms of the day ahead, the calendar continues to be busy with French PPI and consumer spending due, along with German and Italian inflation data. Over in the US this afternoon, focus will be on the second reading of the US Q4 GDP reading. As well as that, we’ve also got the Chicago PMI, ISM Milwaukee, pending home sales and final reading of the University of Michigan sentiment print

 

 

end

 

 

Three bad reports out of Japan last night:

1.jobless numbers surge

2.retail sales plummet by 2%

3.Household spending collapses.

 

so much for Abenomics..

 

(courtesy zero hedge)

 

 

2 Years Of Abenomics Later: Joblessness Jumps As Retail & Household Spending Slump

 

 

For all the constant bullshit spewing from the mouths of any and every Japanese monetary and fiscal policy maker about a “continued moderate recovery”, the facts are the facts and the data is the data – 2 years of Abenomics has utterly failed. The lastest example is tonight’s triple whammy of surging joblessness (up to 3.6% from 3.4% – highest in 6 months), a 2.0% tumble in retail salesYoY (double expectations and worse since the tax hike), and a plunge in household spending (-5.1% YoY – down for the 10th month in a row). But, of course, Japanese stocks are at 15-year highs – so “everything must be awesome” – what a farce.

 

Instead of 3 Arrows…

Strike 1 – Japanese Joblessness surges to 6-month highs – far in excess of expectations…

 

Strike 2 – Retail Sales tumble 2.0% YoY – almost twice as bad as expected – and on par with the tax-hike impact…

 

Strike 3 – Household Spending collapses 5.1% YoY – the 10th drop in a row…

 

But…

 

So everything is awesome!!!

 

 

end

 

 

 

 

Now is it the turn of the ECB to warn the UK not to exclude Russia from the SWIFT system as it could undermine the entire confidence in the whole economic system:

 

(courtesy zero hedge)

 

ECB Warns UK: Excluding Russia From SWIFT “Could Undermine Confidence In The Whole System”

As “isolated” Russia signs a military deal with Cyprus, agrees bilateral trade with Greece, ratifies the $100 billion BRICS Bank, and offers to trade advanced anti-aircraft missiles to Iran, it seems threats of more sanctions against Putin and his nation are finding resistance from an unexpected place. With British PM David Cameron re-demanding that Russia be excluded from the SWIFT global financial payments system, none other than ECB Governing Council member Ewald Nowotny has exclaimed, “one has to be very careful here, exclusion of Russia from Swift would be very problematic because it could potentially undermine confidence in this system as a whole.”

 

As Der Standard reports (via Google Translate),

A SWIFT exclusion of Russia as a sanction against the EU-Ukraine Moscow because of the crisis had last been suggested by British Prime Minister David Cameron. Nowotny said he had spoken with EU Commissioner for Economic Affairs Pierre Moscovici… the question of the Russia-EU sanctions.

 

“I pointed out that one has to be very careful here,” the governor said. Exclusion of Russia from Swift “we would see as very problematic because it could potentially undermine confidence in this system as a whole”.

 

Austria would advocate a pragmatic way. His warning was not so much related to Austria, but on the credibility of the SWIFT system. This international payment system should be a neutral service,Nowotny said.

 

For Austria exclusion of Russia from Swift would have no immediate effect. However,Russia could then put retaliation, “and, of course, would have implications for all companies doing business in Russia there”. But he assumed that it would not come to such a step. He would not comment on the sanctions, “only if sanctioned, this is not the appropriate field.”

*  *  *

Of course, Russia has already created an alternative to SWIFT – as it said it would…as Sputnik News reports,

Almost 91 domestic credit institutions have been incorporated into the new Russian financial system, the analogous of SWIFT, an international banking network.

 

The new service, will allow Russian banks to communicate seamlessly through the Central Bank of Russia.

 

It should be noted that Russia’s Central Bank initiated the development of the country’s own messaging system in response to repeated threats voiced by Moscow’s Western partners to disconnect Russia from SWIFT.

 

 

Joining the global interbank system in 1989,Russia has become one of the most active users of SWIFT globally, sending hundreds of thousands of messages per day. In general, SWIFT provides a secure communication network for more than ten thousands of financial institutions around the world, approving transactions of trillions of US dollars.

 

Earlier this month Russian Deputy Prime Minister Igor Shuvalov expressed confidence that Russia would not be disconnected from SWIFT. In her turn, Russian Central Bank First Deputy Chair Ksenia Yudaeva called upon Russian civilians and financial institutions not to dramatize the current situation.

 

Russian experts point to the fact that Western businesses would face severe losses if they expelled Russia from the international SWIFT system. On the other hand, the alternative system launched by Russia might reduce the negative impacts caused by measures imposed by the West, including possible disconnection from SWIFT, and diminish Western financial dominance over Russia.

*  *  *

…and one wonders how destabilizing it would be for the world financial system if Russia decided unilaterally to leave SWIFT?

 

end

 

 

 

As indicated above the German Parliament approves the Greek bailout.

Schauble makes it clear that Germany is in charge.  The money will not be released until all conditions of the previous memorandum has been approved. Those chances are slim

 

(courtesy zero hedge)

 

German Parliament Approves Greek Bailout After Schauble Makes It Clear Germany Remains In Charge

 

If Bild’s expectation that its “Nein to more Greek bailout” campaign would lead to a near unanimous vote in the Bundestag for a Greek bailout, then it achieved its goal when a massive majority of lawmakers, some 542 of them, voted in favor of giving Greece the prenegotiated 4 month extension to its current bailout. Still, as many pointed out, of the 32 votes against, a record margin for a euro vote, or 29, came from Merkel’s own CDU/CSU block. This was up from 13 voting against the second Greek bailout. Indeed, as the Guardian’s Ian Traynorsummarizes “Merkel’s biggest majority on Greece but also biggest rebellion in her ranks while linke votes for Syriza pals, also a 1st.”

As a result, FT described the post-vote situation as one where Merkel has suffered “substantial rebellion” within her own ranks:

Germany’s chancellor Angela Merkel faced dissent over her eurozone rescue policy on Friday after 32 legislators voted against extending Greece’s bailout.

 

While the four-month extension passed with a comfortable majority of 542 out of 587 lawmakers in the Bundestag who voted, there was a substantial rebellion within Ms Merkel’s Christian Democratic Union and sister party the Christian Social Union. There were 13 abstentions.

 

Dissent in the Bundestag has swelled since the vote over the passage of the second Greek bailout in 2012, when 13 members of her Christian Democratic bloc and four members of coalition partners, the Free Democrats, voted against.

In any event, perhaps some lubrication to the strong Yes vote came from the German finance minister who made it very clear that despite all the pompous rhetoric from Varoufakis, Germany remains in charge:

  • SCHAEUBLE: GREEK PAYMENTS WON’T BE MADE WITHOUT GERMAN APPROVAL

… just in case there was any doubt if Greece may be on route to finally regaining its fiscal sovereignty. He continued, taking a poke at the Op-Ed written by Varoufakis two weeks ago, and the reference to Immanuel Kant:

Finance Minister Wolfgang Schäuble had earlier told MPs that he was not asking for a “change” to Greece’s bailout programme, but an extension “to successfully bring it to an end”. He added that while there was flexibility in the programme, Greece could not make changes without the consent of its European partners.

 

And he said that many European countries had lower minimum wages and living standards than the Greeks.

 

“The Greeks should think about that when they call for solidarity,” he said.

 

Taking flight into philosophy, Schäuble called on his colleagues to remember that Germany is “the land of Immanuel Kant”. “When we come to a reasoned decision, we should think: what would happen if everyone made this decision?”

 

Since Germany was better off than many other countries, it should bear some of the burden of solidarity, he said.

As the Local.de adds “the speech served to illustrate the balancing act the German government is performing, standing as it does between the need to keep  Europe and the single currency together and irritation with what it sees as unreasonable demands from the new Greek government. Other European countries share Germany’s tough attitude, but tough talk from Europe’s effective paymaster has sparked bitter exchanges with the hard-left government of Prime Minister Alexis Tspiras since elections last month.”

Following the Bundestag approval, Greece now has until the end of June to satisfy its lenders, and receive the final payment from its bailout programme, worth €7.2bn. That programme was due to expire on Saturday, until the eurogroup and Greece agreed a four-month extension last week. This vote doesn’t actually unlock any more money, though, which is a problem for the Greek government which may have stopped the bank run and the deposit flight, but as a result of massive tax undercollection, the government itself has no money left, and needs yet another, third, bailout.

This will certainly not please ordinary Germans, because while the Bild campaign achieved nothing in the Bundestag, the German people are quite happy to let Greece drop dead:

Schäuble urged fellow conservative deputies to back the bailout reprieve on Thursday despite his “disbelief” at renewed comments from his Athens counterpart.

 

That disbelief is shared by the public, just 21 percent of whom agreed with the idea of continuing to help Greece in a poll this week.

 

“No more billions for the greedy Greeks!” demanded mass daily Bild on Thursday, printing a huge “Nein!” (No), which it urged readers to hold up for selfies, some of which it published on Friday.

This means that when it comes to the broader population, the impact of the tabloids is far greater than that of the high-brow, statist publications such as Spiegel, which countered with its own “Yes! Yes! Yes!” campaign:

A contrary “Yes! Yes! Yes!” was the response in commentary on news site Spiegel Online. “We need … a loud ‘Yes’ to the euro, to Europe and to the legacy of Helmut Kohl,” it said, referring to Germany’s ex-chancellor, a driving force behind European enlargement and integration after the fall of the Berlin Wall.

So with that the can has been officially kicked… to next week, when as reported yesterday, Greece may decide that the farce has gone on long enough, “delay” a debt payment to the IMF and finally be in default, some 5 years long overdue.

 

 

end

 

As I pointed out to you yesterday, the IMF is owed about 1.6 billion USA that must be paid by the middle of March (in 3 payments).  Greece has only 4 billion euros to its credit but 7.2 billion euros of liabilities due next month. On top of that, it has to roll over 4.6 billion euros of treasury bills. It just cannot make the IMF payment.  It looks like Greece will default unless they get up front money.  Also tax revenues are plunging!!  Today greek stocks and bonds plummeted on this news:

 

(courtesy zero hedge)

 

 

 

 

As IMF Default Looms & Tax Revenues Plunge, Greek Stocks & Bonds Tumble

 

As the rest of the world appears happy to assume everything is fixed in Europe (and if it’s not, Draghi will buy it back to being awesome), Greece is looking unwell once again. Initial exuberance has faded dramatically in the last 3 days as IMF default warnings and a 22.5% plunge in tax revenues has sparked concerns about Greece’s sustainability once again. Default (or restructuring) risk is soaring, Greek bond yields are surging, stocks sliding, and Greek banks (bonds and stocks) are getting hammered. As The Guardian’s Helena Smith notes, “the country is in a strategic vacuum,”and next week’s T-Bill auction could be a major catalyst.

 

Greek Stocks and Bonds Ugly…

 

Greek Banks even worse…

 

 

As The Guardian’s Helena Smith reports,

Angst over the pending funding gap is VERY real. Government figures show that tax revenues have dropped precipitously (22.5%) as a result of the political turmoil gripping the country. Greeks have simply stopped paying. The country’s former deputy premier Evangelos Venizelos has just made a statement saying rather than conducting real negotiations, the new leftist-led government is waging a “war of impressions,”

 

The country is in a strategic vacuum. Just one month after the election everything is in the air. Revenues, cash requirements, fiscal targets. How will the fiscal gap that exists be plugged? Where are we going regarding the debt? Sadly our array of negotiating mistakes has taken us way off from the point we were when the parliament was dissolved,” he said referring to the day snap polls were called in December.

 

Everything is being enthusiastically projected as a triumph, but as soon as you scratch the surface, you see that there is no plan, or result, or security or prospect. The country has to find its goals.

Next week will be interesting given the weakness into the weekend, as The Guardian notes,

In a closely watched auction, Greece plans to sell €875m of six-month treasury bills next Wednesday to refinance a maturing issue. Greek banks use T-bills as collateral to borrow from the ECB’s emergency liquidity line and then invest the money in more T-bills. This helps the government, which is frozen out of the bond markets, to cover its short-term needs.

 

Foreign investors have shied away from T-bill sales in recent months. They are the only source of commercial borrowing for Tsipras’ government.

*  *  *

Greek CDS still indicate a 75% probability of restructuring (assuming ‘norm’ recovery rates)

 

 

end

 

 

Did the large Piraeus bank run out of money? This is something that will cause a massive bank run on Monday whether true or not:

(I will put my money on Stratfor)

 

(courtesy zero hedge)

 

Piraeus Bank Denies Rumor It Has Run Out Of Cash

 

UPDATE: *PIRAEUS BANK CFO DENIES SPECULATION OF CASH SHORTAGE

It appears the worst fears of many Greeks may be coming true following a Stratfor report that Piraeus Bank ATMs in downtown Athens appear to have run out of money – telling “customers that there is no cash and the situation will last through the weekend.” However, locals, reporting on Twitter, claim this is false. Greek stocks (especially banks) are down hard, as is the EURUSD.

 

Stratfor reports Piraeus is out of cash…

 

It seeems not everyone is so sure…

Of course, the mere fact that this is possible is likely to spark some fear into The Greek people as they watch their newly elected government ‘negotiate’ their futures away.

While the Stratfor report may or may not be accurate, the reason why Greek risk is selling off today is that as we reported last night, out of left field Greece decided to lob a grenade across the Troika bow when it threatened that it may “delay” its repayment of one of the seveeral IMF loans due for repayment as soon as one week from today…

 

end
 Protests today in Athens:
(courtesy zero hedge)

Live, From Athens, It’s Anti-Government Protest Live

 

Two words can describe yesterday’s first anti-government protest organized by the far-left Antarsya party now that the Greek honeymoon with the new Syriza government is over: disorganized and violent, as the following video which captured the gist of yesterday’s event – which can hardly be called a protest and if anything was just young angry people tossing Molotov cocktails, shows.

Which is why today’s first truly official protest organized by the Greek communist party in front of the Greek parliament on the well-known Syntagma square, will get far more attention, especially since it was Syriza’s own anti-bailout protests that filled the same venue as recently as a few weeks ago.

The Guardian reports:

“the chants of KKE communist party protesters are wafting through central Athens, reports Helena Smith, as they march through the city centre on their way up Syntagma square where tonight’s “anti-loan” rally is due to take place. It has been raining hard in the Greek capital and only the hardiest are expected to attend the demonstration called to denounce the leftist-led government’s climbdown in Brussels last week.

 

A statement by Greece’s celebrated composer Mikis Theodorakis denouncing the loan accord was to be read out at the rally. Theodorakis met with Alexis Tsipras earlier this week; clearly he’s not placated….”

It may be raining, but that has not stopped a few thousand Greeks from coming out and doing what they do best: demand an end to the austerity, only to realize such a demand is impossible in the confines of the Eurozone:

The question now is: which party will pick up the baton from Syriza, which took just about a month to reneg on virtually all its electoral promises, an event Bloomberg described as follows: “In what’s turning that nightmare into reality, Greece’s month-old anti-austerity government led by Prime Minister Alexis Tsipras had a rude awakening last Friday when German-led pressure forced it to pedal back on most election pledges in the face of national insolvency. On the streets of Athens, Greeks used to political flip-flops in the five years of their odyssey to financial health are taking what has been a capitulation in their stride.”

“When you have your hand outstretched and they say there’s no money, that’s when you put your hands up in the air,” said Alexandra Dimopulos, 60, a retired civil servant. “You may have all the good intentions in the world but that means nothing when you have no money for them.”

Pretty much sums it up.

 

 

end

 

 

And now for our second hot spot:  the Ukraine who initiated capital controls against its own government wishes:

 

(COURTESY ZERO HEDGE)

 

“Panic Must Be Stopped” Ukraine Central Bank Head Says, Boosts Capital Controls

 

 

Yesterday, when we observed the latest record plunge in the Ukraine currency…

… we predicted that the imploding, hyperinflating nation will “halt currency trading any minute.” Again, because recall that this is precisely what Ukraine central bank head Gontareva did the day before, when the currency soared after all third party trades in the Hryvnia were blocked before the government stepped in and effectively shut down the market.

Well, Ukraine has so far not fully blocked all trading, yet, however hours ago Ukraine’s central bank did the next best thing when it announced it would “boost restrictions on capital operations as it fights to quell panic that has triggered deposit withdrawals and depleted foreign-exchange reserves, Governor Valeriya Gontareva said”cited by Bloomberg.

Among the actions implemented the central bank will strengthen limits on activities including paying dividends, and impose a regime of examinations on all import operations that exceed $50,000. The hryvnia rebounded from a record low as the only remaining player in the FX space remains the central bank, and at least today it was buying. A lot: “the hryvnia gained 25 percent to 27 per dollar by 11:56 a.m. in Kiev, rising from the lowest close on record Thursday. Changes in central bank regulation leading to a higher supply of foreign-currency on the market were helping the hryvnia’s appreciation, Stanislav Piletskyy, a Kiev-based treasurer at Citigroup Inc., said by e-mail.”

The problem is that the ramp will certainly not continue once the latest buying spell is exhausted, now that all confidence in the Ukraine currency is now lost, and the central bank has effectively assured of an unhappy ending with statement such as “Panic must be stopped and we are doing that now,” Gontareva said. “For the time being, we are working not on canceling restrictions, but on new ones.”

Needless to say, there is nothing that creates more panic than warning “panic must end or else…”

And as we noted in the “Endgame” article, Ukraine now faces an even bigger problem: running out of cash.

The central bank needs to strengthen bank owners’ responsibility as a prerequisite for the International Monetary Fund-led bailout, Gontareva said. The country can drop capital controls when hryvnia is “back to fundamentals,” she said, adding hryvnia should trade around 20 per dollar.

 

Depositors have withdrawn 17.2 billion hryvnia from banks this year, Gontareva said. Ukraine’s reserves stood at $6.4 billion as of Jan. 31, down from $20.4 billion at end-2013 before the country’s pro-Russian insurgency began.

 

Ukraine has lost two percentage points of its gross domestic product from the annexation of Crimea and 15 percentage points due to losing control over rebel-held areas in eastern Ukraine, she said.

Gontareva’s punchline: “Ukraine has insufficient reserves, and huge capital outflow.” Yes, we can see how that is a problem. And another problem: Ukraine made its bed and invited the west in it. It better hope that the west, and the IMF reciprocate, or else the entire nation will be completely insolvent as soon as 3 weeks from today at which point the country will run out of liquid reserves with which to fund imports and the economy grinds to a halt. All that will be needed then, is another coup to restore the balance that the US Department of State so eagerly destroyed a year ago with its sponsored military coup in Kiev.

The only sad aftermath: yet another failed nation.

The Turkish lira tumbles to over 2.5 lira per uSA dollar as the country is in turmoil.  The Turkish government is totally against the independence of its central bank causing investor folks to be nervous about investing in Turkey.  The gold sales announced in the body of the commentary is not official gold but gold purchased on the open market and sent to Iran for gas:

 

 

end

 

 

 

 

China stated today that the west should seriously consider the security interests of Russian with respect to the Ukraine crisis:

 

(courtesy zero hedge)

 

China Just Sided With Russia Over The Ukraine Conflict

 

When it comes to the Ukraine proxy war, which started in earnest just about one year ago with the violent coup that overthrew then president Yanukovich and replaced him with a local pro-US oligarch, there has been no ambiguity who the key actors were: on the left, we had the west, personified by the US, the European Union, and NATO in general; while on the right we had Russia. In fact, if there was any confusion, it was about the role of that other “elephant in the room” – China.

To be sure, a question few asked throughout the Ukraine civil war is just whose side is China leaning toward. After all the precarious balance of power between NATO and Russia had resulted in a stalemate in which neither side has an obvious advantage (even as the Ukraine economy died, and its currency hyperinflated, waiting for a clear winner), and the explicit or implicit support of China to either camp would make all the difference in the world, not to mention the world’s most formidable axis.

Today we finally got the answer, and the winner is… this guy:

Xinhua reported that late on Thursday Qu Xing, China’s ambassador to Belgium, was quoted as blaming competition between Russia and the West for the Ukraine crisis, urging Western powers to “abandon the zero-sum mentality” with Russia.

Cited by Reuters, Xing said that Western powers should take into consideration Russia’s legitimate security concerns over Ukraine.

Reuters’ assessment of Xing speech: “an unusually frank and open display of support for Moscow’s position in the crisis.

At least it is not a warning to the US to back off or else. Yet.

Speaking in very clear and explicit language, something diplomats are not used to doing, the Chinese ambassador said the “nature and root cause” of the crisis was the “game” between Russia and Western powers, including the United States and the European Union.

He said external intervention by different powers accelerated the crisis and warned that Moscow would feel it was being treated unfairly if the West did not change its approach.

 

“The West should abandon the zero-sum mentality, and take the real security concerns of Russia into consideration,” Qu was quoted as saying.

 

His comments were an unusually public show of understanding from China for the Russian position. China and Russia see eye-to-eye on many international diplomatic issues but Beijing has generally not been so willing to back Russia over Ukraine.

As noted above, China has long been very cautious not to be drawn into the struggle between Russia and the West over Ukraine’s future, not wanting to alienate a key ally. And yet, something changed overnight, with this very clear language, warning some could say, that China will no longer tolerate Pax Americana, and even the mere assumption of a unipolar western world, let alone the reality.

Qu’s comments take place just as talks between the United States and its European allies over harsher sanctions against Moscow.

On Monday, Russian Foreign Minister Sergei Lavrov accused Western powers of trying to dominate and impose their ideology on the rest of world. The United States and European delegations slammed Moscow for supporting rebels in eastern Ukraine.

 

Qu said Washington’s involvement in Ukraine could “become a distraction in its foreign policy”.

And then, Qu’s slap in the face of Obama: “The United States is unwilling to see its presence in any part of the world being weakened, but the fact is its resources are limited, and it will be to some extent hard work to sustain its influence in external affairs.

Especially if and when China decides to send a few peacekeepers of its own into Ukraine. You know – just to make sure US influence in external affairs isn’t “sustained” too much.

 

 

end

 

 

 

 

Rioting on the streets of Kiev today:

 

(courtesy liveleak.com and special thanks to Robert H for sending this to us)
http://www.liveleak.com/view?i=e65_1425003109

 

end

 

 

 

 

A third hot spot today:  Turkey as its lira tumbles to a record low.

It seems that the government is totally against the policies of its central bank.  Investors do not like that!!!

 

In the body of the commentary there is mention of gold sales.  This is not official sales.  It is non monetary gold

 

Turkey has been engaged in selling gold on the open market to Iran in exchange for natural gas.  The West has stopped that.

 

 

 

(courtesy zero hedge)

 

Turkish Lira Tumbles To Record Low As Government Questions Central Bank’s Patriotism

 

Another day, another currency hits a record low against the US Dollar. The Turkish Lira has collapsed in recent weeks since Erdogan rampaged against the ‘independence’ of the Central Bank and extended losses today after the economy minister said the government should discuss changing central bank regulations. Nihat Zeybekci said the Central Bank of Turkey’s independence should be conditional on the body taking “national interest” into account. Turkey continues to dump gold at record rates (money laundering to Iran via Switzerland?) and social unrest is on the rise (despite new laws to clamp down on protests) as the US consulate faces bomb threats.

The Lira keeps tumbling…

 

As Bernd Berg, the director of emerging-markets strategy at Societe Generale SA in London, said:

“The lira is now poised to tumble much further amid the political turbulences and questions about the independence of the central bank.”

 

“The escalation of political risks is a major concern.”

Simon Quijano-Evans, a strategist at Commerzbank AG in London, said:

“An unnecessary blurred central bank picture will do nothing but aggravate the situation and lead to FX uncertainty.”

And add to that the poltical and social unrest occurring in the country, including bomb threats at the US consulate:

Turkish police arrested a suspect outside the US consulate in Istanbul on Friday, after he claimed to have a bomb and threatened to carry out an attack.

 

The person had parked his vehicle in front of the consulate in the mid-morning and police had cordoned off the entire area during the incident.

 

“A suspect was apprehended by local authorities and the vehicle was removed without incident,” the consulate said on its Twitter feed.

 

The person may be suffering from mental illness, the Dogan news agency reported.

 

In 2013, the US embassy in Ankara was attacked by a suicide bomber who killed a Turkish security guard.

*  *  *

And Turkey continues to dump gold (as we have detailed in the past):

Turkey’s rocketing gold exports helped narrow the trade deficit to its lowest level since 2010.

 

 

The surge in gold sales limited the annual drop in exports to 0.6 percent while imports fell by 13.7 percent to $16.6 billion. Switzerland was the top destination for exports of the precious metal, accounting for sales worth $982 million. Turkey has in the past seen occasional spikes in the metal’s exports and the January jump in shipments will prove to be a temporary phenomenon, according to Deniz Cicek, an economist at Finansbank in Istanbul.

 

“Gold lies behind the pleasant surprise in January,” Oyak Bank chief economist Mehmet Besimoglu said by phone. “Exports would have fallen significantly if it wasn’t for gold.”

*  *  *

As SocGen previously warned, The honeymoon is over

Turkey was supposed to be the big trade of the year. After all, it did look particularly good at some point, with the sharp decline in inflation and the collapse in oil prices. Somehow, Turkey had become the new darling of global emerging markets (GEM).

 

Fast forward a month or two and this is now all over.

 

So what happened? Essentially, a big policy error on the part of the central bank in the context of serious political pressures. The emergency meeting saga caused tremendous damage to the credibility of the policy framework and to investor confidence.

 

I am in the US visiting investors right now, and nobody is bullish on Turkey any more.

 

Last time I was there, everybody was. If I had been in the governor’s shoes, I would have stayed quiet and continued easing normally at each scheduled meetings. Nothing wrong with that, and in fact, Mr. Market was going to love it. I would also have looked up the definition of “emergency” in the dictionary.

 

The TRY selling off by 2% each day, causing serious stress in the local financial market? An emergency.

Inflation declining a bit faster than usual, helped by fortunate external factors? Not an emergency.

 

Overall, this was a highly disappointing experience and now the CBRT has moved to my list of “fading” central banks from that of the “following” ones. What I mean by that is I want to position for policy backtracking in Turkey at this point, given the heightened risk of policy volatility. Our 1s5s curve steepener has been struggling quite a bit, as it was a bullish trade on market-friendly policy easing. We just elected to close it at flat PnL.

 

Meanwhile, I believe that positioning is still heavy on the Turkish bullish side, even if sentiment has sharply deteriorated, which represents a major technical risk.

*  *  *

*  *  *

And the once golden boy trade of the year has now become a never-ending nightmare.

 

 

end

 

 

 

 

Both the Ukraine and Venezuela have entered hyperinflation. The following is a good study of what happened to Venezuela:

 

(courtesy Nick Cunningham/ OIL Price.com)

 

 

 

Paranoia And Purges For Venezuela As Oil Misery Continues

 

Submitted by Nick Cunningham via OilPrice.com,

As the finances of Venezuela continue to deteriorate under the collapse of crude oil prices, the government of President Nicolas Maduro is becoming more paranoid and vindictive.

Venezuela derives the vast majority of its export earnings from sending oil overseas. With the largest endowment of crude oil reserves in the world, the oil-driven economy worked well for the late Hugo Chavez: he provided generous support for the poor, and built allies in the western hemisphere by dispensing cash and cheap oil in exchange for political allegiance.

But state-owned PDVSA has struggled to keep production up. Rather than using its earnings to develop more fields, much of its earnings have been diverted for political and social projects. Chavez also purged PDVSA of thousands of experienced workers, leaving the company short of well-trained staff.

Chavez could paper over the decay of PDVSA’s production base because oil prices were so high in his final years. And for the first year or so of Maduro’s tenure, while the economy began showing worse signs of stress, he too didn’t feel any urgency to solve PDVSA’s problems.

However, the utter bust in oil markets pulled the rug out from beneath the Venezuelan economy.Inflation is running at an annual rate of 68 percent. Shortages of food and medical supplies are common. Shoppers at grocery stores need to submit finger prints to ensure they are not purchasing more than their allotted amount of basic goods. A confusing set of varying exchange rates and currency controls are doing very little to slow capital flight.

Maduro is cracking down on political opponents as the country deals with the economic crisis. Antonio Ledezma, the Mayor of Caracas, was arrested on February 20 on charges of conspiracy and working with the U.S. to stage a coup, touching off a wave of protest. Last year, in the wake of the unprecedented riots facing the “Bolivarian” regime, Leopoldo Lopez was also tossed in jail. Dozens of other perceived political enemies remain locked up. A teenager was shot and killed at an anti-government rally on February 24. Maduro’s government was quick to blame the police officer – as if security forces have not been encouraged from above to take a hard line with opposition protests over the last few years.

Maduro’s pronouncements have become more paranoid as the economy has worsened. He hasaccused Vice President Joe Biden of being the mastermind behind a plot to oust him from power, and questioned whether President Obama was aware of that fact. On February 2 President Maduro had the head of a major retail chain arrested for conspiring against the state by creating long lines at store locations that Maduro said was “irritating the people.”

Maduro continues to rely on assertions that food shortages, economic hardships, and even violence are the result of American plots, a claim that has worked in the past but is becoming an increasingly tired line of argument for many Venezuelans.

The only hope for Maduro is a dramatic rise in oil prices, which could provide a reprieve from the economic crisis he finds himself in. He has pled with Saudi Arabia and other OPEC members to slash production to boost prices, but to no avail. He even went hat in hand to China for financial assistance, with only modest pledges from Chinese President Xi Jingping.

The economic situation may only grow worse. The government’s budget breaks even with oil prices at an estimated $117.50 per barrel. Inflation could rise to an eye-popping 100 percent in 2015, and GDP could fall by as much as 7 percent. The government will likely see ashortage of foreign exchange of at least $7 to $8 billion this year. Gauging the credit default swap market, investors are betting that the chances of a default over the next five years are a near certainty.

With no imminent rebound in sight for oil prices, Maduro is resorting to state-sponsored repression to quell growing opposition.

 

 

end

 

 

(courtesy zero hedge)/your early morning trading from Asia and Europe)

 

Your more important currency crosses early Friday morning:

 

 

 

Eur/USA 1.1224 up  .0022

USA/JAPAN YEN 119.32  down .062

GBP/USA 1.5430 up .0015

USA/CAN 1.2476 down .0031

This morning in Europe, the euro is  up, trading now well below the 1.13 level at 1.1224 as Europe is supported by other nations keeping the Euro afloat,  Europe reacts to deflation, announcements of massive stimulation, the Greek crisis and the possible default of the Ukraine.   In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. The yen continues to trade in yoyo fashion as this morning it settled up again in Japan by 6 basis points and settling well below the 120 barrier to 119.32 yen to the dollar. The pound was up this morning as it now  trades just above the 1.54 level at 1.5430.(very worried about the health of Barclays Bank and the FX/precious metals criminal investigation/Dec  12 a new separate criminal investigation on gold,silver oil manipulation and now the HSBC criminal probe). The Canadian dollar was well up again reacting to the slightly higher oil price and is trading  at 1.2476 to the dollar. It seems that the 4 major global carry  trades are being unwound. (1) The total dollar global short is 9 trillion USA, and as such we now witness a sea of red blood on the streets as derivatives blow up with the massive rise in the dollar against all paper currencies.We also have the second big yen carry trade unwind as the yen refuses to blow past the 120 level.(3) the Nikkei vs gold carry trade. (4) short Swiss Franc/long assets  (European housing), the Nikkei, etc. These massive carry trades are terribly offside as they are being unwound. It is  causing deflation as the world reacts to a lack of demand. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT.

The NIKKEI: Friday morning : up 12.15 points or 0.06%

Trading from Europe and Asia:
1. Europe stocks mostly in the red

2/ Asian bourses mixed    … Chinese bourses: Hang Sang in the red ,Shanghai in the green,  Australia in the green: /Nikkei (Japan) green/India’s Sensex in the green/

Gold very early morning trading: $1208.00

silver:$16.51

 

Early Friday morning USA 10 year bond yield: 2.04% !!!  up 1  in basis points from Thursday night/

 

USA dollar index early Friday morning: 95.06  down 23 cents from Thursday’s close.

 

 

This ends the early morning numbers, Friday morning

 

 

 

And now for your closing numbers for Thursday:

 

 

 

 

 

 

Closing Portuguese 10 year bond yield: 1.83% down 5 in basis points from Thursday

 

Closing Japanese 10 year bond yield: .34% !!! par in basis points from Thursday

 

Your closing Spanish 10 year government bond,  Friday down 2 in basis points in yield from Thursday night.

 

Spanish 10 year bond yield: 1.26% !!!!!!

 

Your Friday closing Italian 10 year bond yield: 1.33% down 2 in basis points from Thursday:

 

 

trading 7 basis points higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

Closing currency crosses for Friday night/USA dollar index/USA 10 yr bond:

Euro/USA: 1.1186  down .0016

USA/Japan: 119.62 up .241

Great Britain/USA: 1.5434 up .0020

USA/Canada: 1.2501 down .0005

 

 

The euro fell like a stone   this afternoon but it was down  on the day by 16 basis points finishing the day just below the 1.12 level to 1.1186. The yen was down badly in the afternoon, and it was down by closing to the tune of 24 basis points and closing well above the 119 cross at 119.62. The British pound gained some ground during the afternoon session and was up on  the day closing at 1.5434. The Canadian dollar was down again today as the oil price was up today.  It closed at 1.2501 to the USA dollar

As explained above, the short dollar carry trade is being unwound, the yen carry trade , the Nikkei/gold carry trade, and finally the long dollar/short Swiss franc carry trade are all being unwound and these reversals are  causing massive derivative losses. And as such these massive derivative losses is the powder keg that will destroy the entire financial system. The losses on the oil front will no doubt produce many dead bodies. The last asset still rising are the stock exchanges.

 

 

Your closing 10 yr USA bond yield: 1.99 down 4 in basis points from Thursday

 

 

 

Your closing USA dollar index: 95.31 up 2 cents on the day.

 

 

European and Dow Jones stock index closes:

 

England FTSE  down 3.07 points or 0.04%

Paris CAC  up 40.86 or 0.83%

German Dax up 74.47 or 0.66%

Spain’s Ibex up  38.80 or .35%

Italian FTSE-MIB up 172.66 or 0.78%

 

 

The Dow:down 81.72 or 0.47%

Nasdaq; down  24.36 or 0.49%

 

 

OIL: WTI 49.47 !!!!!!!

Brent: 62.05!!!!

 

 

Closing USA/Russian rouble cross: 61.55 down almost 1   roubles per dollar on the day.

 

closing UKrainian UAH:  (hryvnia) 27.74 UAH to the dollar.

Since November the currency has lost more than half its value.

 

end

 

 

 

And now for your more important USA economic stories for today:

 

 

 

Your New York trading for today:

 

Stocks End Best Month Since Oct 2011 With A Whimper

 

Just one thing… Spock’s Dead, Stocks Red (and AIG’s Benmosche died too)

*  *  *

While February was the S&P’s best month since October 2011 (amid collapsing macro data and earnings), the day and week was on the ugly side… so we thought this was more appropriate than “everything is awesome” for a change…

*  *  *

Despite the best efforts to shrug off the dismal data and ramp the open, it appears The Fed’s Stan Fischer and ECB’s Constancio seemed to take the liquidty glow off the market…

  • *FISCHER: FED BALANCE SHEET TO EVENTUALLY SHRINK TO $1-$2 TLN (wait what!?)
  • *FISCHER SEES ‘NO GOOD REASON’ TO TELEGRAPH EVERY POLICY ACTION (so a June surprise is possible?)
  • *FISCHER SAYS JUNE, SEPT. GET MAIN WEIGHT OF PROBABILITY
  • *FISCHER SAYS ASSUMPTIONS ON RATE TIMING COULD CHANGE
  • *CONSTANCIO: ECB TO FIND OTHER STIMULUS IF BONDS IN SHORT SUPPLY (ECB QE might be smaller?)

Stocks closed a nasty shade of red today… Nasdaq’s worst day since January

 

On the week, Dow, Trannies, and S&P 500 end red…

 

Quite amonth for the NASDAAPL..

 

But – all that matters is that this was the S&P’s best month since October 2011…

 

AAPL did not help matters – aside from the epic farce meltup on news of the Chicago PMI crash… AAPL’s worst week since 1/16…

 

Treasury yields dropped 9-12bps on the week (2Y -1bps only)…

 

The US Dollar surged this week to the highest since September 2003 – seemingly after wage inflation showed up in the CPI data… led by a plunge in EUR and Swissy

 

EURUSD ended the week below 1.1200 ahead of next week’s QE start…

 

The 8th monthly rise in a row for USD Index…

 

Commodities were generally flat to very slightly higher today… with only oil down on the week…

 

But crude oil ramped into the close – in a perfect deja vu of last week…

 

Crude oil broke its 7-month losing streak – the same length as the 2008/9 drop…

 

*  *  *

Stocks were February’s leader with Bonds and Precious Metals worst…

 

Year-to-Date, Silver remains the leader with gold and bonds just outperforming stocks…

 

Year-to-Date, US stocks don’t make the Top 10 withRussia and Saudi Arabia leading (in USD terms)…

 

Charts: Bloomberg

 

end

 

Pending home sales miss for the 5th month in a row.  The data coming from the USA seems to suggest that the USA economy is faltering terribly:

 

(courtesy zero hedge)

 

Pending Home Sales Miss For 5th Month In A Row

 

Despite a modest 1.7% rise (after dropping 1.5% in December), Pending Home Sales missed expectations of a 2.0% rise – the 5th monthly miss in a row.

It appears NAR’s chief economist Lawrence Yun, whose specialty is revising the script to goalseek any desired outcome until the deviation from reality is so massive the NAR has no choice but to do a massive backward-looking revision, has flip-flopped yet again: On existing home sales, NAR blamed the drop on lack of supply (bizarrely, just as prices dropped at the same time ) while on pending home sales, NAR says buyers overcame lack of supply.

To wit:

Lawrence Yun, NAR chief economist, says for the most part buyers in January were able to overcome tight supply to sign contracts at a pace that highlights the underlying demand that exists in today’s market. “Contract activity is convincingly up compared to a year ago despite comparable inventory levels,” he said. “The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth.”

At least he didn’t blame snow in the seasonally-adjusted winter like he did for months in a row one year ago. Then again, there is always February…

In the meantime, the narrative spin must go on:

Yun also points to more favorable conditions for traditional buyers entering the market. All-cash sales and sales to investors are both down from a year ago1, creating less competition and some relief for buyers who still face the challenge of limited homes available for sale.

 

“All indications point to modest sales gains as we head into the spring buying season,” says Yun. “However, the pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices. Appreciation anywhere near double-digits isn’t healthy or sustainable in the current economic environment.”

Wait, realtors complaining that the 10 or so ultra-luxury houses for which there is some flipping demand have priced themselves out of the market? Unpossible.

And the best part – NAR forecasts:

Total existing-homes sales in 2015 are forecast to be around 5.26 million, an increase of 6.4 percent from 2014. The national median existing-home price for all of this year is expected to increase near 5 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.

And when the housing rebound fails to meet “expectations”… just blame groupthink.

 

end

 

The big University of Michigan consumer sentiment report tumbles the most for over 1 1/4 years. The U. of Michigan report is for the entire USA. Remember that the consumer is 70% of GDP:

 

(courtesy U. of Michigan consumer sentiment report/zero hedge)

 

UMich Consumer Sentiment Tumbles Most In 16 Months

Despite modestly beating the flash print earlier in the month, it appears consumers are less enamored with how awesome everything is in America. Printing 95.4 against January’s 98.1 – this is the biggest MoM drop since Oct 2013. Both current conditions and future expectations dropped from January with fewer people expecting higher incomes, and a plunge in favorable business expectations over the last few months.

 

end
Following the U. of Michigan consumer sentiment report, the big Chicago PMI which is an entire USA manufacturing index and they report that its PMI crashed to levels not since since 2009.  Again, the economy is faltering badly.

Chicago PMI Crashes Most Since Lehman To Lowest Since July 2009

January’s brief ‘hope’ bounce following 3 months of weakness is long forgotten as February’s Chinago PMI crashes to 45.9 (missing expectations of 57.5) – its lowest since July 2009. This is the biggest MoM drop since Lehman in Oct 2008. New Orders suffered the largest monthly decline on record, leaving them at the lowest since June 2009. Seems like it is time to blame the weather… PMI says it is “difficult to gauge magnitude of weather and port strike” but blames it nonetheless.

 

 

The biggest drop since Lehman (and 2nd biggest since 1980)…

*  *  *

  • Forecast range 55 – 59.6 from 43 economists surveyed
  • Prices Paid rose compared to last month
  • New Orders fell compared to last month
  • Employment fell compared to last month
  • Inventory rose compared to last month
  • Supplier Deliveries rose compared to last month
  • Production fell compared to last month
  • Order Backlogs fell compared to last month
  • Business activity has been positive for 11 months over the past year.

Commenting on the Chicago Report, Philip Uglow, Chief Economist of MNI Indicators said,

“It’s difficult to reconcile the very sharp drop in the Barometer with the recent firm tone of the survey. There’s some evidence to point to special factors such as the port strike and the weather, although we’ll need to see the March data to get a better picture of underlying growth.“

*  *  *

“The West Coast port strike and the harsh winter probably had a negative impact in February, although it is difficult to gauge the magnitude.”

Here – let us help – Snow Impact here and Port Strike Impact here…

*  *  *

Sure enough the “fault” lies on the weather…. (but didn’t the economists know it was cold? and know about the port strikes?)

 

And cue the GDP downgrades and demands from the sell-side that Yellen delay rate hikes…

  • *HATZIUS SEES `GOOD ARGUMENT’ FOR FED MOVE AFTER SEPT.

Charts: Bloomberg

 

 

end

 

The 4th quarter GDP is revised down to only 2.2% and no doubt will fall further with revisions next month.

 

 

(courtesy zero hedge)

 

 

Q4 GDP Revised Down To 2.2% From 5.0%: Full Breakdown

There was much hope that when Q3 GDP soared to 5%, primarily on the back of Obamacare spending recalendarization and a massive consumption/personal saving data revision, that the US economy would finally enter lift-off mode. Those hopes were reduced by about 60% when moments ago the BEA announced that Q4 GDP was revised from the original 2.64% print to only 2.18%, which while better than expected, was the lowest economic growth rate since the “polar vortex.”

The main reason for the revision: a substantial drop in growth contribution from private inventories, which instead of adding 0.82% to the bottom GDP line, only contributed 0.12% in Q4 following the first revision. To be sure, this was perfectly expected, and is exactly what we said would happen last month after the first inventory number:

… here is what Q4 inventories did: rising by $113.1 billion in Q4,
this was the second highest quarterly increase in the 21st century,
second only to September 2010
. It’s all GDP-crushing liquidations from here.

 

Following out post, the BEA revised the entire data series.

Some other changes:

  • Personal Consumption was 2.83% of the final GDP, down from 2.87%
  • Fixed Investment was 0.71%, vs 0.37% before, a number that will plunge in Q1 as a result of the shale capex halt.
  • Net trade subtracted even more from growth, with Net Exports less Imports amounting to -1.16%, down from -1.02%
  • Government offset the decline modestly, subtracting -0.32% from growth, compared to -0.40% in the first revision.

Full breakdown below.

end
Let us wrap up this week, with Greg Hunter of USA Watchdog:
(courtesy Greg Hunter)

By Greg Hunter’s USAWatchdog.com  2.27.15

Next week, Israeli Prime Minister Benjamin Netanyahu is set to address Congress on the deal the Obama Administration is trying to do with Iran to curtail its nuclear program. No doubt, Netanyahu will warn a deal that will eventually allow Iran to get nuclear weapons will cause big problems for the world.   There has been increasing friction and drama with President Obama over this address.  All the drama surrounding Benjamin Netanyahu’s address to Congress can only mean one thing–negotiations with the U.S. and Iran to curtail its program are not going well.  Likely, there will be, once again, no deal at the end of the current deadline, which is the end of next month.  Some Democrats are threatening to boycott the address,and members of the President’s staff have clearly said they are not happy with Congress for inviting the Israeli Prime Minister.  I predict this will be resolved one way or another this year.

Another top NATO general is, once again, warning about increased possibilities of war with Russia.  The most recent ceasefire was broken not long after it was instituted, and now there is no end to the fighting in sight.

In the Middle East, it looks like plans are being made to try to attack the Islamic State, or ISIS, in Iraq.  Some 25,000 regional troops are being prepared to try to take back Mosul, which is the second biggest city in Iraq.  The U.S. is not supplying troops for the assault, only military trainers.  The U.S. will supply air power, but a few weeks ago, American military experts said it would take around 80,000 top quality troops to defeat ISIS.  The operation is planned for the spring of this year.

The Federal Reserve is adamantly against any sort of audit.  Fed Chief Janet Yellen thinks the Central bank needs its independence, which some call total secrecy and non-transparent monetary policy.  When asked to provide information about a recent meeting with the White House and the Treasury, Yellen said they were “private one-on-one meetings” and releasing any information as to what was talked about would, according to Yellen, not be “appropriate.”  The Federal Reserve is not federal and is, in fact, a cartel of private banks.

Finally, there is record snowfall and record cold temperatures this winter.  I think this makes it a tough sell for the man-made global warming proponents.  The facts say the climate is getting colder, and not warmer.  I think the reason the name was changed to “climate change” is because most people not only realize this fact, but are experiencing it in everyday life this winter.

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.

We  will see you on Friday.

bye for now

Harvey,

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: